News

Global Market Report - 30 August

Australia

The Australian share market is expected to open higher, buoyed by gains in the trade-sensitive technology and industrial sectors.

The SPI200 futures contract was up 47 points, or 0.73 per cent, at 6,528.0 at 8am Sydney time, suggesting a bounce for the benchmark S&P/ASX200 on Friday.

The Australian share market has finished flat as traders wait for the other shoe to drop on the US-China trade war.

The benchmark S&P/ASX200 index finished Thursday up 6.8 points, or 0.1 per cent, to 6,507.4 points, while the broader All Ordinaries was up 4.9 points, or 0.07 per cent, to 6,605.7 points.

On Wall Street overnight, the Dow Jones Industrial Average finished up 1.25 per cent, the S&P 500 was up 1.27 per cent and the tech-heavy Nasdaq Composite was up 1.48 per cent.

Heavyweight tech stocks with tariff exposure, such as Apple, up 1.69 per cent, and Microsoft, up 1.89 per cent, boosted the technology sector by 1.73 per cent on Thursday for its best day since 16 August.

The FTSE 100 index in the UK ended 1.0 per cent higher after the value of the pound retreated.

The Aussie dollar is buying 67.30 US cents, unchanged from Thursday.

Asia

China stocks weakened on Thursday, led by banks and developers, weighed down by worries of a global recession from an intensifying US-China trade war and the rising possibility of a no-deal Brexit.

The CSI300 index fell 0.4 per cent to 3,789.12 at the end of the morning session, while the Shanghai Composite Index slipped 0.1 per cent to 2,890.29.

Hong Kong stocks reversed course to end higher on Thursday on fresh comments from China that Beijing and Washington were in discussions and would try to resolve the year-long trade dispute between both economies.

The Hang Seng index ended up 0.3 per cent at 25,703.50, while the China Enterprises Index closed 0.1 per cent higher at 9,992.64.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.28 per cent while Japan’s Nikkei index was down 0.23 per cent.

Europe

European shares rose after a weak open on Thursday, boosted by a rally in Italian shares, with positive comments from China on its trade talks with the United States helping sentiment.

China’s Commerce Ministry said both sides “should create conditions” for progress in negotiations and that China was against escalating the trade war and was willing to resolve the issue calmly.

The gains in markets were largely broad-based and the benchmark index, which was flat in early trading, rose 0.61 per cent by 0755 GMT.

Italian stocks rose 1.33 per cent to hit its highest level since Aug. 2 as President Sergio Mattarella is expected to give two former political enemies, the 5-Star Movement and Democratic Party (PD), a chance to form a new government on Thursday.However, worries lingered in the markets.

The benchmark European index is on track to end August about 3 per cent lower as an inversion in the US Treasury yield curve showed investors were concerned about economic growth in the face of a trade war that is now in its second year.

Fears of a disorderly Brexit weighed on Britain's mid-cap index, which slid for a second day in a row, after Prime Minister Boris Johnson decided to suspend Britain's parliament for more than a month before Brexit.

Johnson’s move also increases the chance of him facing a vote of no-confidence in his government, and possibly an election.

British IT group Micro Focus slumped 29.8 per cent to trade at the bottom of the STOXX 600 after it warned on profit, citing lower spending by clients.

Bouygues rose 4.9 per cent after the French conglomerate reported a better-than-expected first-half core operating profit.

North America

US stocks have rallied more than 1 per cent, buoyed by gains in the trade-sensitive technology and industrial sectors, as China expressed hope on trade negotiations, easing concerns that rising tensions could stoke a recession.

China's commerce ministry said both sides are discussing the next round of talks scheduled for September, but progress would be determined by whether Washington could create favourable conditions.

US President Donald Trump said in a Fox News radio interview that trade talks were scheduled for Thursday "at a different level", but did not provide details.

Some analysts cautioned that the comments from China were light on substance, and pointed to month-end rebalancing on Friday as supportive of stock gains.

Chipmakers, which draw a large part of their revenue from China, also gained, sending the Philadelphia semiconductor index up 2.25 per cent.

Industrial names that have also been highly correlated to trade progress, such as United Technologies, advanced, with the sector up 1.77 per cent.

The Dow Jones Industrial Average rose 326.15 points, or 1.25 per cent, to 26,362.25, the S&P 500 gained 36.63 points, or 1.27 per cent, to 2924.57 and the Nasdaq Composite added 116.51 points, or 1.48 per cent, to 7973.39.

Still, the three main indexes were on course to log their worst monthly performance and first monthly decline since a selloff in May, on worries the intensified trade battle between the world's two largest economies will lead to a global recession.

The Trump administration on Wednesday made official its additional five per cent tariff on $US300 billion in Chinese imports and set collection dates of September 1 and December 15, prompting several hundreds of US companies to warn of price hikes.

A number of companies, including electronics retailer Best Buy and teen apparel retailer Abercrombie & Fitch, reported results earlier on Thursday and warned of the impact from tariffs.

Shares of Best Buy slid 7.99 per cent, making it one of the worst performing issues on the S&P 500, while those of Abercrombie tumbled 15.10 per cent.

Dollar General was the best performer among S&P 500 companies, rising 10.68 per cent on an upbeat full-year profit forecast. The S&P retail index climbed 1.67 per cent.

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